Forecasting Demand
Estimating an organization’s future demand of a product can be defined as demand forecasting; and its purpose is to determine the potential demand for a product. Forecasting will allow management to determine and make key decisions in regards to a product’s pricing, its potential to market the product and the business growth (Marquis, 2015). In forecasting the demand for the Razor Rocketeer Tricycle in its first year on both the national and international market are as follows:
National
International
1st Q: 1400
700
2ndQ: 1468
740
3rdQ: 1820
921
4thQ: 2,014
1,100
Total: 6,702
3,461
Number of tricycles @ $19.99 per unit: 335.267 (amount in hundred millions)
173.136
Break-Even
In order to make the minimal amount of profit to cover the costs associated with the production of the product, this will include the costs associated with labor and is determined by conducting an analysis. The break even analysis determines the point that an organization’s revenue is equal to the costs associated with receiving the revenue, the figures that exceed the break-even point are known as the margin of safety (investopedia.com, 2015). Assuming that the Razor Rocketeer costs per unit are $19.99 the variable costs associated with the product are $4.00 and the monthly fixed costs are $7,000 we would need to sale 346 units, calculating the units in sales dollars we would need to make a minimum of $6,916.54 to break even.
Sales
Forecasting sales is used to give insight regarding the sales of a product for a specific period of time; its use establishes activity levels in other forecasts and budgets for an organization (Berry, 20005). In forecasting the first year’s sales of the Razor Rocketeer Tricycle the Team projects that the first years sales can expect to be as follows:
The above data is the sales forecast data shown in the chart, Series 1 is reflective of the data the Razor Rocketeer Tricycle sales on a national scale,...